Zelle® is a payment platform. Zelle® does not impose taxes on transactions made on its network. If payments you receive on the Zelle® network are taxable, it is your responsibility to report them to the IRS. If you have any questions about your tax obligations, please consult with a tax professional.
The rise of scams
However, a CNN report found that consumers reported losing $210 million to fraudsters on payment apps and services in 2023 alone, and a J.D. Power survey earlier this year found that 3% of the people who used Zelle lost money to scammers.
What this means for you is that it is your responsibility to issue a 1099-NEC or 1099-MISC if you've paid a contractor $600 or more throughout the calendar year using Zelle®.
For the 2023 tax year (for which returns are due on April 15, 2024), the old tax reporting thresholds will apply. You'll receive Form 1099-K from Venmo, PayPal, and other third-party apps if: You have payment transactions for goods and services sold that exceed $20,000 and more than 200 transactions.
Zelle® does not report transactions made on the Zelle Network® to the IRS, including payments made for the sale of goods and services. The law requiring certain payment networks to provide forms 1099K for information reporting on the sale of goods and services does not apply to the Zelle Network®.
Does Zelle report to the IRS? If you have received more than $5,000 in taxable business income via an online payment app in 2024, the IRS will be able to find out about it through a Form 1099-K sent by that platform in January 2025. On Zelle, there's no such reporting requirement.
The daily transfer limit allowed to be sent via the Zelle® feature is $500 per day. Transfers exceeding $500.00 can be made through our free Online Bill Pay service. There is no daily limit when using Member-To-Member transfers. Limits are set to protect you from fraudulent activity.
The new "$600 rule"
Under the new rules set forth by the IRS, if you got paid more than $600 for the transaction of goods and services through third-party payment platforms, you will receive a 1099-K for reporting the income.
Taxpayers should report all income whether they receive a tax form for it or not. As far as how to properly report it: You should be able to determine the amount of income based on your bank statements. The total of the Zelle transfers received is your gross income.
Washington, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) sued the operator of Zelle and three of the nation's largest banks for failing to protect consumers from widespread fraud on America's most widely available peer-to-peer payment network.
Sending limits: For your security, we restrict the amount of money you can send to recipients. There are daily and 30-day (rolling) limits.
Zelle (/zɛl/) is a United States–based digital payments network run by a private financial services company owned by the banks Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, U.S. Bank, and Wells Fargo.
What this means. This means that for 2023 and prior years, payment apps and online marketplaces are only required to send out Forms 1099-K to taxpayers who receive over $20,000 and have over 200 transactions. For tax year 2024, the IRS plans for a threshold of $5,000 to phase in reporting requirements.
Zelle is a peer-to-peer (P2P) payment solution that allows you to accept customer payments and pay suppliers and employees hassle-free and in minutes.
Cash or Check Deposits of $10,000 or More: It doesn't matter if you're depositing cash or cashing a check. If you make a deposit of $10,000 or more in a single transaction, your bank must report the transaction to the IRS.
Unlike Venmo and other popular payment processors, Zelle doesn't report your activities to the IRS. No matter how much business income you collect via the platform, it will never issue a 1099-K form for you.
Zelle, on the other hand, does not hold funds. Instead, they do direct bank transfers between users and these transactions are not subject to the IRS's 1099-K reporting requirements.
For background: The ARPA lowered the reporting threshold to impose a reporting requirement on TPSOs on Form 1099-K from gross payments of more than $20,000 and 200 transactions for a payee to gross payments totaling more than $600 (regardless of the number of transactions) for a payee.
Cons. Limited functionality: Zelle only allows person-to-person transfers between U.S. bank accounts. If you want to add a credit card to make payments or send money to someone internationally, you'll need to use another payment app.
Zelle does not charge a fee, which means it offers both of these—and since payments happen via the app, you also don't need a checkout terminal. There is, however, an important consideration that may be a deal-breaker for some businesses.
Some notable financial institutions that NerdWallet has reviewed and that don't participate directly in the Zelle network include Alliant Credit Union, Barclays, Connexus Credit Union, LendingClub Bank, Marcus by Goldman Sachs, and Synchrony Bank.
You can also view your Zelle® payments on your monthly statement.